Debates of March 14th, 2002

The Economy

[John Manley, Liberal, Deputy Prime Minister and Minister of Infrastructure and Crown Corporations]

Mr. Speaker, I expect that the private sector will recognize not only the elimination of the deficit, not only the reduction of corporate taxes below those levels in the United States, not only the reduction of capital gains taxes below those in the United States, but will also recognize that right now today we can buy more goods and services for a dollar in Canada than we can buy for 62 cents in the United States.

That means they need to prepare by making the investment in equipment, in research and development and in technology that is going to ensure that they win those markets and retain those markets.

Taxation

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, the Minister of Finance is spreading untruths to deny the existence of fiscal imbalance in Canada. To support his erroneous argument, he has gone so far as to distort the conclusions of the conference board. I quote the conference board, and it is very clear, “the dynamics in place for each level of government will unquestionably create a problem of fiscal imbalance”.

That is what the conference board says.

Is the Minister of Finance prepared to be more forthcoming and recognize, as the conference board has done, that a significant fiscal imbalance exists, to the detriment of Quebec and the provinces?

[Paul Martin, Liberal, Minister of Finance]

Mr. Speaker, allow me to quote the conference board, which says that “This scenario assumes that the government will not allocate any of its surplus to tax reductions, new spending or additional transfers”.

And here is its conclusion, I am quoting the conference board once again, “The exercise is purely hypothetical—”.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, one must always start with the hypothetical. If he does not yet understand this, I wonder how he prepares his budgets.

Let us have a look at these five years to which he constantly refers. The conference board concludes there is fiscal imbalance. For the next five years, the conference board is forecasting a deficit of $10 billion for Quebec and a surplus of $14 billion for Canada, for the five years he refers.

Rather than twisting the conclusions of the conference board, which are good for the short, medium and long term, will the minister have the honesty to admit that there is a fiscal imbalance, call a meeting of provincial ministers and discuss the issue with them?

[Paul Martin, Liberal, Minister of Finance]

Mr. Speaker, again, looking at the figures quoted by the leader of the Bloc Quebecois, the conference board, according to its projections, is predicting, as he just mentioned, a deficit next year for Quebec, and the PQ government.

However, we see this morning that what Quebec is predicting for next year is a surplus.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I would remind the minister that the figures for the first five years he is criticizing in the conference board study are the figures in his own budget. It is completely ridiculous.

The Minister of Finance is well known for underestimating budget surpluses. And since 1994, he has been out an average of over 171% per year. This year, he will be out by close to 500%.

Will the Minister of Finance admit that even his own figures are clearly and deliberately low?

In its study, the conference board concludes that there is fiscal imbalance in Canada now—not in the future—and that it will become worse over time.

[Paul Martin, Liberal, Minister of Finance]

Mr. Speaker, the member says that the conference board used our figures.

It did projections over a 20 year period. We have always said that projections over 20 years are not realistic.

Take the last 15 years in the United States. Last year, the United States predicted an incredible surplus and this year they are looking at a deficit. We say that projections over 20 years are not realistic.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, if the conference board has no credibility with the minister, how is it that he himself gave it a $185,000 contract this year to do a study?

Will the Minister of Finance have the decency and the honesty to admit that the conference board study which he is using to deny the existence of fiscal imbalance concludes, on the contrary, that there is indeed fiscal imbalance for each of the years, starting with this one, to the benefit of the federal government and its popularity and to the detriment of the provinces?

[Paul Martin, Liberal, Minister of Finance]

Mr. Speaker, the problem is not the conference board but the mandate it was given by the Séguin commission.

For example, it said, “In 20 years, no recession”. But, in the past 20 years, we have seen the 1980-81 recession, and the 1989-90 recession, with years of after-effects. It said that there would be no tax cuts. Last year marked the largest tax cuts in the history of Canada.

This shows that the problem is the mandate given by the Séguin commission.

The Economy

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, let us be clear about what the Deputy Prime Minister actually said. He said “Many Canadian firms would enter the land of the living dead if the Canadian dollar were strengthened”. These grotesquely irresponsible remarks broadcast worldwide caused the dollar to fall another one-half cent.

Rather than fearmongering about what could happen if the Canadian dollar actually rose to 80¢, what steps is the minister prepared to take to ensure that it actually does?

[John Manley, Liberal, Deputy Prime Minister and Minister of Infrastructure and Crown Corporations]

Mr. Speaker, the efforts we have made in order to improve Canada's fiscal situation, including the reduction of taxes at various levels, are in fact contributing to the conditions that will see a stronger currency over time.

The point the hon. member needs to take into account is that not only do the federal government and provincial governments have to invest in science, research and development technology but also in education and training, things I am sure the hon. member agrees with. The private sector also needs to take advantage of the favourable environment which is being created and make likewise investments in research and development technology and equipment to ensure that they can compete.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, we do not want the minister to dwell on what he has actually done. We saw the effects of that yesterday. We want to hear what he is going to do to get us out of this mess.

For a whole week the dollar was firmly above 63¢. It was the first time it had remained that high since before Christmas. Then the Deputy Prime Minister worked his magic. The foreign exchange players point the finger of blame directly at the minister. Why did he make those reckless comments? Does the minister want to go down in history as the 60¢ dollar man?

[John Manley, Liberal, Deputy Prime Minister and Minister of Infrastructure and Crown Corporations]

Mr. Speaker, the hon. member alludes to reading the remarks that I actually made which in fact forecast that the direction the dollar is likely to go is up. The challenge therefore for Canadian firms is to ensure that they make the investments that are going to be necessary. Those include training and skills development for workers that will ensure that we can compete, that our firms continue to compete as they have been competing in that environment.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, yesterday the Deputy Prime Minister blamed Canadian business for low productivity rates.

Does the Deputy Prime Minister honestly believe that insulting Canadian businesses by describing them as being uncompetitive will help strengthen Canadian productivity and will help strengthen the Canadian dollar?

[John Manley, Liberal, Deputy Prime Minister and Minister of Infrastructure and Crown Corporations]

Mr. Speaker, I do not place the blame on anybody except to say that the government does not run the decision making in private firms. Of course we ought to be encouraging the private sector to make the investments in science, research and development, training and skills development. Those are the essence of the innovation strategy which the government has put forward. We believe it is important not just for the public sector but also for the private sector to make the right decisions to enable Canada to compete in the 21st century.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, this is not the first time the Deputy Prime Minister has failed economics 101. He tripped over the blue line with his bungled NHL bailout plan. He was on even thinner ice when he once said that high taxes were good for productivity.

Does he honestly believe that by keeping Canadian corporate and capital taxes among the highest in the world that the government is doing its part to improve Canadian productivity?

[John Manley, Liberal, Deputy Prime Minister and Minister of Infrastructure and Crown Corporations]

Mr. Speaker, in fact this government has made corporate taxes among the lowest in the world, lower than in the United States.

Does the hon. member think that the government should make all the decisions on investments in the private sector? I hope not.

Employment Insurance

[Carol Skelton, Canadian Alliance, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, the minister of human resources continues to smear innocent EI complainants to hide her neglect and incompetence.

Unemployed workers across Canada were unfairly penalized by her department. Instead of smearing innocent victims, why will the minister not own up to her own incompetence and pay back these victims?

[Jane Stewart, Liberal, Minister of Human Resources Development]

Mr. Speaker, the hon. member is wrong and she is misguided.

Let me be clear. Individuals who through no fault of their own made mistakes in their declared earnings will not be penalized. There is no administrative penalty. Further, if individuals have more information about their individual circumstances that they would like the department to review for application of the law, we would be glad to do that.

[Carol Skelton, Canadian Alliance, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, I enjoyed the minister's response to her EI rip off rule.

The workers victimized by the minister lost benefits they were legally entitled to. These people did nothing wrong. Will the minister do what is right and pay back her victims?

[Jane Stewart, Liberal, Minister of Human Resources Development]

Mr. Speaker, it is absolutely absurd that the Alliance Party is pretending to be sympathetic to employment insurance recipients. It is the party that on page 7 of its own platform said it would do nothing but cut employment insurance benefits. It is the party whose member for Calgary--Nose Hill said that EI fraud is rampant and “a significant drain on the system”. It is the party whose member for North Vancouver said of EI fraud “If you have cheated and been fined, you should be off for life”. Now where is the compassion in that?

Taxation

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, the Séguin commission, the conference board, the Premier of Quebec, Bernard Landry, the leader of the Quebec Liberal Party, Jean Charest, and the provincial ministers of finance--that is a quite a lot of credible people--say that there is a tax imbalance in Canada.

Would the Minister of Finance not act responsibly by looking at this issue in an honest and open fashion with his provincial counterparts, the next time they meet?

[Paul Martin, Liberal, Minister of Finance]

Mr. Speaker, yesterday I made it very clear that I was prepared to discuss the issues that my provincial counterparts wish to raise at our next meeting. If this is really what they want to discuss, I am certainly prepared to do so.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, there are two essential conditions. First, this discussion must be conducted in an open fashion, which does not seem to be the case right now.

Second, the minister must agree to put this issue on the agenda, so that people can get ready and know that it is a common concern.

Is the Minister of Finance serious about this and will he agree to put this issue on the agenda and discuss it with an open mind, which is something he is not doing right now?

[Paul Martin, Liberal, Minister of Finance]

Mr. Speaker, all our meetings are always conducted in a spirit of co-operation. As I just said, the agenda is jointly decided by the Canadian government and the provinces. If my counterparts wish to raise any issue, I am very open to discussing their priorities.